Cautious optimism in Nassau, Suffolk, Brooklyn and Queens

Real Estate Weekly, August 2, 1995

The Greiner-Maltz Company report on real estate and business for the second quarter of 1995 shows that deals are being closed and commitments are being made for expansion and growth in Nassau, Suffolk, Brooklyn, and Queens, involving industrial properties, retail, and offices, but that there is clearly a hesitation factor that is deterring a strong real estate recovery.

Richard Maltz, chairman, who heads the Long Island City branch of the firm, said, "We are seeing business owners acting "cautiously optimistic." They seem to have mixed expectations about the continuing strength of the economy. Even if their own business is good, they are guarded in their expectations for the economy or the region. While some hesitate to plan expansions, others feel that this is a good time to invest and expand, preparing for future growth. Despite the region's undeniably high costs, it clearly offers many benefits to a wide variety of businesses."

In this climate, the Greiner-Maltz Company quarterly survey of real estate activity in the New York metropolitan region provides a realistic focus on a significant segment of the business world, which reflects and is affected by, the greater economy. William Greiner, president and head of the Woodbury, Long Island office, points out that, "Our own company made the kind of technological investment that illustrates the positive attitude of many local businesses, as our Woodbury office upgraded to the most advanced communications systems and computerized data base of industrial property and in our industry. Because we are using a new data base, we are not making the kind of historical comparisons for Nassau and Suffolk that we did in the past; our 1995 figures will be the benchmark from which we will work in the future."

Queens: For the second quarter of 1995, the survey shows the borough's availability rate for industrial property, at 13.43 percent, higher than it has been since 1991, although a substantial amount of space was sold or leased this quarter. The addition of two very large units totalling over 714,000 square feet made a major impact on the availability total and percentage. That addition overwhelmed the fact that three deals were closed involving spaces over 100,000 square feet, totalling 445,000 square feet. Over 3.3 million square feet is now available in 13 units over 150,000 square feet - a figure that while large, is not troublesome, as it accounts for 8.76 percent of the inventory of space above 150,000 feet.

Queens, where prices are generally 30 percent lower than Manhattan, is either winning business or losing proportionately less than Manhattan. According to James Brown, labor market analyst for the Department of Labor, the textile and garment industries are important in parts of Queens such as Ridgewood, which houses many knitting mills. Maspeth, which is centrally located near highways and convenient to Manhattan, has attracted many food processors and distributors. The most important real estate issue in the borough is re-zoning to permit (or to keep out) big box retailers.

Brooklyn: The overall industrial availability rate, at 14.5 percent, has gone up for the past four quarters, but is lower than last year at this time. A substantial number of new properties has been listed - predominantly small ones. Over a million square feet of space was closed or leased, a trend that has been seen in three of the last four quarters, but that does not compensate for the rising number of new listings. Brooklyn continues to be the home of a great many business start-ups, many of them serving the specialized needs of the area's diverse population.

Nassau's availability rate of 7.55 percent for industrial property is down considerably from the last quarter, when it was 8.49 percent. All of the listing, sales, and leasing activity has been within smaller units (under 75,000). The point has been reached in Nassau County that it may be very difficult to find a facility of a specific kind or size. Among spaces 40,000 to 50,000 square feet, there are only 12 units available. And among spaces over 150,000 square feet, only two are available.

In Suffolk, the industrial availability rate is 7.39 percent, down from 8.14 percent in the first quarter of the year. The number of new listings was about the same as in the first quarter, but because most of those listings were for small units, less square footage was added, and almost twice as much space was sold or leased, including seven units over 50,000 square feet.

"Throughout the region, the real estate market is definitely tightening," Maltz said. "Investors and businesses considering the lease or purchase of new facilities are advised to actively seek their requirements. We are on the edge of narrowing free choice, rising prices, and finance rates."